2 Marriott hotels to share site near Music City Center

Convention hall lures developers

Jan. 17, 2013

An Atlanta-based developer joins a slew of hotel developers buying parcels to capitalize on an expected increase in demand from the planned opening of Nashville’s new Music City Center convention hall, shown here on Jan. 3, 2013. / Samuel M. Simpkins / The Tennessean

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The Tennessean

An Atlanta-based developer is moving forward with plans to build a pair of hotels south of Broadway that would be Nashville’s second lodging project with two brands in one location.

North Point Hospitality Group Inc. plans to spend $65 million to develop the 1.09-acre site at Fifth Avenue South and Korean Veterans Boulevard that it bought late last year. It paid nearly $6 million, or $125 a square foot, for the land. The developer also joins the slew of hotel developers buying parcels to capitalize on an expected increase in demand from the planned opening of Nashville’s new Music City Center convention hall.

“Nashville has many diverse demand-generators and so we want to capitalize on that with the growth in the SoBro district,” said S. Jay Patel, North Point’s CEO. “We’re high on the area — we think it’s a phenomenal, up-and-coming market. The convention center of course is a great catalyst for development.”

Construction will occur in two phases.

Work on a 14-story, 200-room Residence Inn by Marriott and the first four levels of an adjacent parking garage should start by year-end, with opening planned during the first quarter of 2015, Patel said. Later, an 11-story, 150-room SpringHill Suites by Marriott hotel, along with an additional level of parking, will be built atop the garage. The second phase is expected to be completed in the first quarter of 2017.

Construction just began on Nashville’s first dual-branded hotel at West End and 18th Avenue South in midtown. A Residence Inn and SpringHill Suites will be built simultaneously and open next summer with shared parking and back-office operations, said Anil Patel, a physician and principal in developer Ace Hospitality.

North Point’s SoBro hotels will have separate lobbies, check-in areas and swimming pools, but share management and sales and marketing teams, laundry facilities, maintenance and housekeeping, as well as other back-office operations, Patel said.

“You get the benefits of the shared services and synergy from an operational standpoint,” he said about the dual-branded concept. “We’ll be able to maximize value of the land and reduce our development costs.”

Jan Freitag, senior vice president of lodging research firm STR in Hendersonville, said dual-branded hotels can share other facilities, such as gyms, restaurants and parking. “I wouldn’t call it a trend — it’s still few and far between but it’s definitely happening,” he added.

Dual-branded hotels also can offer different price points, allowing a company booking rooms, for instance, to put senior executives in the higher-rate hotel and other employees in the more budget-friendly option, Freitag said.

Limited service

Neither the Residence Inn nor SpringHill Suites concept allows for a restaurant and bar inside the hotel. However, Patel said, North Point is looking at options, including outside the hotels. The hotels will have about 150 employees when both are open, he said.

Without a restaurant and banquet space, the new hotels will be considered in the limited, or select service, category. Butch Spyridon, president of the Nashville Convention & Visitors Bureau, has cited a need for another large 400- to 500-room hotel to meet demand for large blocks of rooms near the Music City Center, instead of many new limited service properties.

North Point’s new hotels should still meet a need, said Chuck Pinkowski, owner of hospitality consulting firm Pinkowsi & Co. in Memphis, which helped the CVB evaluate pricing of the Music City Center. “The combined brands total 350 rooms, and I think that will help the convention bureau sell more convention business,” he said.

Interest remains high for potential hotel sites south of Broadway. Hotelier Ray Dayal, whose Pinnacle Hospitality over the summer spent $5.25 million on sites, including a parcel at the southwest corner of Fifth Avenue South and Korean Veterans Boulevard, has received many inquiries from brokers representing developers interested in buying the properties he plans to develop into quality-branded franchises including a new Holiday Inn hotel.

“Opening of the convention center is going to be beneficial to the existing hotels that have been renovated,” said Dayal, who also owns Ramada Nashville Downtown Stadium hotel off Interstate Drive and the Best Western Downtown hotel at 711 Union Street.

Getahn Ward can be reached at 615-726-5968 or at gward@tennessean.com. Follow him on Twitter @Getahn